Women at higher risk of insolvency but no more profligate than men, says R3

Women, coastal towns and the North East are most at risk of insolvency, according to the Government’s latest annual insolvency report.

The figures show that 53.4 per cent of insolvencies involved women, compared to 30 per cent in 2000, and 53 per cent in 2015.

When broken down by gender, that means there were 20.6 insolvencies per 10,000 women in 2016, compared to 18.7 insolvencies per 10,000 men.

Likewise, women were involved in 65 per cent of Debt Relief Orders and 52 per cent of Individual Voluntary Arrangements (IVAs), but only 39 per cent of bankruptcies.

R3, the independent body for business recovery professionals, said the gap in insolvencies between men and women is “becoming entrenched”. But it is not simply the case that women are more extravagant than men.

“The big differences come when you look at Debt Relief Orders (DROs) and bankruptcies. Women are much more likely than men to use a DRO, which is designed to help people with assets under £1,000 unable to pay even low value debts,” said Mark Sands, chair of R3’s Personal Insolvency Committee.

“It’s very easy to ‘over-spend’ if you don’t have much money available to you in the first place. Penalties like unauthorised overdraft charges or missed payment fees can become a problem and can keep people in a debt spiral. Lower incomes and employment levels mean women are more likely to be vulnerable to financial shocks and have less room for financial manoeuvre than men.

“As women make up the majority of the public sector workforce, they will also have been disproportionately affected by the public sector pay cap.”

Bankruptcy, on the other hand, is more likely to be used by men. Bankruptcy is most commonly associated with the loss of big value assets, such as a company or job.

Regionally, insolvency rates are typically highest on the coast, in places where major industries have declined, says Mr Sands. Coastal towns often have lower wages and higher levels of unemployment, making finances vulnerable to short-term shocks.